Part III: Behind The Curtain
D. S. Mitchell
One thing we have learned over the years is that Donald Trump is very aware of perception, most notably, the size of his fortune. In a 2006 lawsuit Trump sued Timothy L. O’Brien, author of TrumpNation: The Art of Being The Donald, for $5 million in damages because O’Brien asserted that Trump was actually “worth somewhere between $150 million and $250 million.” This was after Trump had stated in the book that he was worth $6 billion.
Trump claimed that “low ball estimates of his wealth came from guys who have four hundred pound wives and were jealous of his success.” ***(“four hundred pound wives’ sounds eerily familiar. Remember that imaginary “four hundred pound hacker siting on his bed” Trump described during the debates? So, my first twisted thought is that if I hear the “400 pound” line come out of his mouth I will assume it is an outright lie.)
So, what is Trump really worth? We are now entering murky waters. In the O’Brien lawsuit Trump claimed that an unfavorable news story, article, comment, or book in this case, could “psychologically hurt me. I am a billionaire, not a perceived billionaire.”
Court records from that case, based on a Trump Organization financial statement placed his net worth at $3.5 billion, far less than the $6 billion Trump claimed to O’Brien during interviews for TrumpNation. That same year there were many other efforts to assess the size of Trump’s fortune. North Fork Bank, now Capital One Bank, estimated his total worth to be $1.2 billion, while Deutsche Bank put the estimate at closer to $788 million in 2005.
Trump’s brand is the core of the company. In his court deposition Trump claimed, “the brand is my reputation.” And the value of that brand, is difficult to assess. In fact, Trump’s CPA used two different values himself, when preparing the court documents, in one statement the accountant valued the brand at $2 billion, and in another set of documents supplied to the same court, the CPA declared the value of the brand to be $4 billion.
A segment of Trump’s wealth is in real estate holdings. Real estate appraisals are notoriously variable. That said, Trump has been shown to create his own world view and his own property values, rarely based on any substantiated facts. One of O’Brien’s attorneys focused on Trump’s claim that he owned the Trump Waikiki Hotel. The attorney produced a licensing agreement between Trump and the real owner of the Trump Waikiki Hotel, to which Trump answered, “This is such a strong licensing agreement. I consider it to be a form of ownership.”
In the same deposition, Trump famously, when asked how he calculated his net worth, responded, “My net worth fluctuates, and it goes up and down with markets and with attitudes and with feeling, even my own feelings, it can vary actually from day-to-day.”
Well, for God’s sake, what sense does that make? I know that some days I feel better than others, but basically when I add up the numbers of all my assets, because they are real numbers, not some number I picked out of the air, rarely do they fluctuate significantly over a short time period, and I venture to say the same is true for Trump, but in his case it is more about, how he feels. Just speaking for myself, this is very bizarre. You either have $20 bucks in your wallet, or you don’t. It isn’t like, hey its Thursday, and I feel like I have a $100 in my wallet. Really?
Trump went on to lose his lawsuit against Timothy O’Brien on appeal, in 2011.
Many paragraphs back I talked about Trump’s lackluster performance when choosing people to work with when branding his projects. In 2007 Trump was working with Bayrock on deals totaling over $2 billion. These included, Trump SoHo, Trump Fort Lauderdale, Trump Phoenix and several other proposed deals in Istanbul, Kiev, Moscow and Warsaw. A review of Trump’s partnerships with Bayrock on many projects is a window into some ugly truths about Donald Trump’s business history, his judgment, and activities that highlight possible legal vulnerabilities for him.
One of Bayrock principals was a career criminal named Felix Sater. Sater had links to organized crime in the United States and Russia. Sater was even a Justice Department informant spilling many secrets, according to Loretta Lynch, of his illegal activities and the crimes of many underworld figures. He served prison time in the US for felony assault. Sater had attacked a fellow stockbroker slashing the man’s face with a broken Martini glass. The victim required a 11o stitches just to hold his face together.
Sater is not a nice guy. Somebody you would keep away from your kids, away from, right? Not in Trump’s case. Sater is known to have escorted the Trump kids around Moscow solo, many years ago, rented space at Trump Tower, was a business partner and an “advisor” for at least a decade.
Trump’s method of distancing himself from his old friends and partners that come under legal, or media scrutiny, is to claim, “I barely knew the guy. He could be sitting across the table and I wouldn’t recognize him.” Another view into the warped Trump world, “It’s all good, until you get caught.”
From what I have read, in 2002 representatives from Bayrock met with Trump, who was struggling to overcome a long period of financial instability and public humiliation. Remember, this was before The Apprentice. Trump was a pariah to both New York banks and New York society.
When Bayrock came calling, Trump as with many associations in his life didn’t ask a lot of questions, other than, “how much money can I make?”
Bayrock offered Trump a sweet deal, 18% equity stake in the future Trump SoHo Hotel and Condominium project, a steady stream of management fees on all Bayrock projects and the ability to plaster his name on properties without him having to invest any of his own money.
Obviously, Trump did not care about his partners honesty, or their background. He did not vet potential partners, but rather relied on “gut instinct.” Using such methods he created a situation where his already diminished reputation was at further risk.
It is said that his father, Fred Trump was friendly with multiple New York mobsters. While doing business in Atlantic City, Donald was known to have had ties to organized crime. It fits the pattern of doing what benefits Trump.
Initial marketing literature from Bayrock indicated that the primary source of funding for the firm was a Russian oligarch. A former insider and now contentious outsider and litigant, Jody Kriss, has a lawsuit proceeding through Federal court alleging that he departed Bayrock because he became convinced that the company was a front for a huge Russian money laundering scheme. In addition, to the millions Kriss claimed Bayrock stole from him personally, he claimed Bayrock also participated in cash skimming, and tax dodging.
In a 2007 deposition Trump testified that Bayrock had brought Russian investors to his offices at Trump Tower to discuss investing in Russia. Trump volunteered that, “Russia is one of the hottest places in the world for investment.”
It is not entirely clear, to me at least, when Trump first became involved in Russia related deals. I am aware of a trip Trump took to Russia in the 1987 after the fall of the Soviet Union. That 1987 trip was arranged by the Russian government to examine potential business opportunities. It was as if from the beginning the Russians were building a portfolio on the bombastic American. They immediately recognized his susceptibility to flattery and according to a Bloomberg News article written by none other than Trump nemesis, Timothy L. O’Brien, “this big, black hole of need inside Donald Trump for praise, attention, and affirmation.”
No deals emerged from that contact, at least that I have been able to uncover. By 2001 Russia was being looted of vast wealth by a kleptocracy that arose with Vladimir Putin. These oligarchs were mostly hand-picked Putin loyalists. This new class of ultra rich Russians needed a method to legally, or illegally hide their money overseas.
Real estate was an appealing vehicle for such money laundering. By this time, Trump had hooked up with Bayrock, a real estate development company supported by Russian money. Tevfik Arif, a former Soviet official ran Bayrock along with the previously mentioned Felix Sater.
Arif and Sater offered several projects to Trump and in 2004 signed a deal to explore the potential of building a Trump Tower in Moscow and at least on project in Ukraine. Things looked promising enough for both Ivanka and Donald Jr to travel to both Kiev and Moscow in search of the “right deal.” Between 2007-2008 Don Jr went to Russia six times.
In 2007, Jody Kriss claimed in his ongoing lawsuit against Bayrock that an Icelandic fund, FL Group, working with wealthy Russians invested $50 million in the Trump SoHo development project. According to Kriss this “investment” was in reality part of an elaborate tax-fraud”, money laundering scheme.
In 2008 Trump sold a Palm Beach estate he had bought in 2004 for $40 million to a Russian fertilizer billionaire, Dmitry Rybolovlev for $95 million. Trump states he has never met Rybolovlev. That claim was brought into question when on November 3, 2016 Rybolovlev’s Airbus A319 was photographed in Charlotte, North Carolina parked near Trump’s Boeing 757. Really? Seems a strange coincidence. But, then Trump expects us to believe in a series of odd coincidences.
Donald Jr in 2008 at a real estate conference said, “Russians make up a pretty disproportionate cross-section of a lot of our assets…We see a lot of money pouring in from Russia.” The question for me becomes, what specifically were the Trump’s doing with all this money that was “pouring in.”
Suzanne Andrews writing for Vanity Fair in March 2017 asked the same question, “Was he referring to investments in the Trump Organization, loans to the company, or the flood of Russian money being spent to buy Trump condominiums? Exactly which, is difficult to know without Trump’s tax returns.”
If nothing else, Trump has proved himself a survivor with a dedicated and tireless ability to self promote and self aggrandize. He leveraged those skills to recreate himself as a branding dynamo and a golf course developer. But it wasn’t until The Apprentice that his fortunes truly changed. The Apprentice would become a platform by which Trump would convince the weekly viewing audience of over 10 million that he was a business genius. He impressed his audience with his televised swanky lifestyle, luxury penthouse apartment, private jet and personal helicopter.
Part IV of this series will continue to unravel the complicated history of Donald Trump, the Russians and the money.
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